[Why did my fund suddenly drop in value?]

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ram
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Re: [Why did my fund suddenly drop in value?]

Post by ram »

VWIAX (Wellesly admiral) "dropped" about 2% today. It is in my Roth with dividend to be reinvested. It should all show up in the next 2-3 days.
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Wakefield1
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Re: [Why did my fund suddenly drop in value?]

Post by Wakefield1 »

ram wrote: Mon Dec 18, 2017 7:37 pm VWIAX (Wellesly admiral) "dropped" about 2% today. It is in my Roth with dividend to be reinvested. It should all show up in the next 2-3 days.
About 11:00 AM Dec. 19-the money has reappeared overnight after disappeared yesterday

I guess if you tried to sell or exchange during the phantom period you could run into problems!
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Re: [Why did my fund suddenly drop in value?]

Post by randomizer »

Hello, December, my old friend...
87.5:12.5, EM tilt — HODL the course!
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ram
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Re: [Why did my fund suddenly drop in value?]

Post by ram »

As Wakefield noted above it has reappeared within 24 hours.
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Re: My Fund is Down?! IT'S DISTRIBUTION TIME!!!

Post by Portfolio7 »

livesoft wrote: Fri Dec 30, 2011 4:43 pm I'd like to see this as a poll:

I noticed my fund was down big time, so I
(a) Quickly posted to my favorite forums about my huge loss asking "What's up?"
(b) Looked at all the other posts about huge one-day drops on my favorite forums and figured it out
(c) Looked at my fund's web site and figured out there was a distribution
(d) Didn't bother to look because I already knew about distributions this time of year
(e) My fund is down? I didn't even notice.
For decades I was (e), but this year I've been having fun getting a visceral feel for volatility (or lack thereof.) I guess I tripped C) (except I read something wrong about the dist date), D) (but wanted to understand it better) and A) (because while I know it was supposed to happen, I wasn't familiar with the step-by-step process.) I was thinking my NAV per share would simply drop, shares increase, net change would be zero. Instead you get a big negative return, a day passes, and then the reinvestment makes you whole.
"An investment in knowledge pays the best interest" - Benjamin Franklin
Wakefield1
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Re: [Why did my fund suddenly drop in value?]

Post by Wakefield1 »

Now some of my funds will truly drop in value at distribution time: I need a little more income (building up my possible housebuying/downpayment war chest) so I reconfigured some of my Vanguard taxable account funds to pay dividends to my Credit Union account instead of reinvesting them (you can do it on your logged in Vanguard web access and do it individually for your various funds (you can leave some of them on reinvest or reinvest only dividends vs. capital gains)
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

Well, it's that time again: viewtopic.php?f=10&t=244260
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by Whakamole »

Happy September, everyone. Distributions should start hitting next week: https://investornews.vanguard/upcoming- ... formation/

Declaration dates for popular funds:

September 20th: Wellesley, Wellington
September 24th: S&P 500, most International funds, Extended Market, Total World
September 26th: Balanced, Total Stock
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Re: [Why did my fund suddenly drop in value?]

Post by montanagirl »

Did wellesley post an unusually large cap gains distribution today??
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Re: [Why did my fund suddenly drop in value?]

Post by AerialWombat »

.....
Last edited by AerialWombat on Fri Jun 18, 2021 8:11 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
zvez
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Re: [Why did my fund suddenly drop in value?]

Post by zvez »

and again, it seems a glitch with share price on vanguard funds. VTWNX down $1.87 a share. Hope it's a mistake anyway.
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Re: [Why did my fund suddenly drop in value?]

Post by zvez »

never mind, they fixed it.
rongos
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Re: [Why did my fund suddenly drop in value?]

Post by rongos »

How does a distribution work for money market funds that maintain a $1.00 NAV?

When such a fund makes a distribution, do they maintain a $1.00 NAV throughout?

If so, if there's a regular monthly distribution, what's to keep an investor from timing the distributions?
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Re: [Why did my fund suddenly drop in value?]

Post by livesoft »

rongos wrote: Tue Mar 12, 2019 12:41 pm How does a distribution work for money market funds that maintain a $1.00 NAV?

When such a fund makes a distribution, do they maintain a $1.00 NAV throughout?

If so, if there's a regular monthly distribution, what's to keep an investor from timing the distributions?
Money market funds and some bond funds accrue the monthly dividend in a separate unseen place much like a savings account at a bank accrues interest.

If one sells shares before the end of the month, then the sold shares no longer accrue a dividend for the owner that sold them and at the end of the month when the monthly dividend is paid, one receives less of a dividend than if they had not sold the shares.

If one buys shares before the end of the month, then the bought shares accrue a dividend for the owner that bought them for the remainder of the month and at the end of the month when the monthly dividend is paid, the owner receives more of dividend than if they had not bought the shares.

In any event, there is no arbitrage (timing) that an investor can do to screw another investor out of their fair share of dividend.
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rongos
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Re: [Why did my fund suddenly drop in value?]

Post by rongos »

Thank you, livesoft, for the answer. An hour of googling could not answer what you said just minutes after my posting. (Bogleheads is awesome :-)

Just one more question.
livesoft wrote:If one sells shares before the end of the month, then the sold shares no longer accrue a dividend for the owner that sold them and at the end of the month when the monthly dividend is paid, one receives less of a dividend than if they had not sold the shares.
In such a case, if an investor sells all their shares in the money market fund and no longer owns the fund, does the investor still receive a distribution at the end of the month of their accrued interest? It seems odd that one can still receive a distribution for a fund they no longer own.
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Re: [Why did my fund suddenly drop in value?]

Post by livesoft »

rongos wrote: Tue Mar 12, 2019 1:16 pmIn such a case, if an investor sells all their shares in the money market fund and no longer owns the fund, does the investor still receive a distribution at the end of the month of their accrued interest? It seems odd that one can still receive a distribution for a fund they no longer own.
If one sells all their shares and no longer owns any shares of the fund, then the money market fund manager will pay out the accrued dividend when all the shares are sold. So the investor still receives the accrued distribution, but before the end of the month. I believe this is also the way savings accounts work.
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by Wakefield1 »

oldzey wrote: Fri Mar 15, 2019 7:47 am Yes folks, it's that time again:

Find out if your fund is declaring a dividend this month
Looks like VGHAX sneezed today. Zombie $ to reappear on April Fools" Day?
Glad that thing is in my Roth and not in my taxable!
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oldzey
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

Well, it's that time again - here's the latest information from Vanguard:

"Find out if your fund is declaring a dividend this month"
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by S_Track »

I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
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Re: [Why did my fund suddenly drop in value?]

Post by MNGopher »

S_Track wrote: Tue Jun 11, 2019 9:30 am I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
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Re: [Why did my fund suddenly drop in value?]

Post by dbr »

MNGopher wrote: Tue Jun 11, 2019 9:35 am
S_Track wrote: Tue Jun 11, 2019 9:30 am I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
Exactly, even as the value a share should price at goes down the market is already pricing the share up and down constantly. I believe it is true that one can see the effect of the dividend in the opening price set by the market overnight. Someone may explain the ins and outs of that.

People have written papers that try to extract an observation of the effect of dividend on share prices against constant market noise, and the drop is there.
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Re: [Why did my fund suddenly drop in value?]

Post by S_Track »

dbr wrote: Tue Jun 11, 2019 10:10 am
MNGopher wrote: Tue Jun 11, 2019 9:35 am
S_Track wrote: Tue Jun 11, 2019 9:30 am I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
Exactly, even as the value a share should price at goes down the market is already pricing the share up and down constantly. I believe it is true that one can see the effect of the dividend in the opening price set by the market overnight. Someone may explain the ins and outs of that.

People have written papers that try to extract an observation of the effect of dividend on share prices against constant market noise, and the drop is there.
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
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Re: [Why did my fund suddenly drop in value?]

Post by alex_686 »

S_Track wrote: Tue Jun 11, 2019 11:00 am That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
The market. From a strategic level the company's value must fall by exactly as much as distributed. From a tactical level there are a number of arbitrage trades one can do to make risk free money if it does not drop. I suspect that arbitrage trades is the answer to your question.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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Re: [Why did my fund suddenly drop in value?]

Post by dbr »

S_Track wrote: Tue Jun 11, 2019 11:00 am
dbr wrote: Tue Jun 11, 2019 10:10 am
MNGopher wrote: Tue Jun 11, 2019 9:35 am
S_Track wrote: Tue Jun 11, 2019 9:30 am I understand why a funds NAV drops after a distribution but is the same true when you hold individual stock. For example say you own stock in Company Z and it pay a 2% Dividend, does the share price also drop by 2%? If yes, how does that work if its the market that determines stock price? Thanks
It probably won't drop by exactly 2%. The dividend payout is just one of many factors that affect the stock price on a daily basis.
Exactly, even as the value a share should price at goes down the market is already pricing the share up and down constantly. I believe it is true that one can see the effect of the dividend in the opening price set by the market overnight. Someone may explain the ins and outs of that.

People have written papers that try to extract an observation of the effect of dividend on share prices against constant market noise, and the drop is there.
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
It's still the market, but what we mean by that is a systematic offset combined with whatever underlying price trend might be going on combined with the remaining variation which is assigned to noise. Actually one paper I read seemed to be able to support the idea that the price drop was actually the after tax value of the shares after making an attempt to ascertain the overall tax cost (gain or loss) to the pool of investors they imagined to comprise the market. As far as before opening price setting, see here: https://finance.zacks.com/stock-price-c ... -3571.html
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Re: [Why did my fund suddenly drop in value?]

Post by Phineas J. Whoopee »

S_Track wrote: Tue Jun 11, 2019 11:00 am ...
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
There is no central pricing authority, therefore there is nobody to assign any such thing.

Uninformed investors can get taken advantage of by those who understand the dividend dynamic. That's why the major exchanges adjust limit orders left open overnight just before the ex-dividend date. They're not assigning a drop. They're just protecting the marks from the sharps.

By accounting convention the market price is whatever the most eager seller and most eager buyer most recently agreed to. Placers of market orders take what they get. Placers of limit orders have to agree with each other in order to trade.

Equity markets are driven by limit orders. The institutional investors, who account for most daily volume, adjust their own limits, taking into account anything they want in addition to a dividend.

Domestic end-of-day equity mutual fund prices account for the most recent trades (the last daily one per security while its exchange is open).

PJW
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Re: [Why did my fund suddenly drop in value?]

Post by S_Track »

Phineas J. Whoopee wrote: Tue Jun 11, 2019 12:15 pm
S_Track wrote: Tue Jun 11, 2019 11:00 am ...
That is interesting, so if you remove the market noise, who assigns the drop due to the distribution?
There is no central pricing authority, therefore there is nobody to assign any such thing.

Uninformed investors can get taken advantage of by those who understand the dividend dynamic. That's why the major exchanges adjust limit orders left open overnight just before the ex-dividend date. They're not assigning a drop. They're just protecting the marks from the sharps.

By accounting convention the market price is whatever the most eager seller and most eager buyer most recently agreed to. Placers of market orders take what they get. Placers of limit orders have to agree with each other in order to trade.

Equity markets are driven by limit orders. The institutional investors, who account for most daily volume, adjust their own, taking into account anything they want in addition to a dividend.

Domestic end-of-day equity mutual fund prices account for the most recent trades (the last daily one per security while its exchange is open).

PJW
Thank you for the detailed explanation.
theplayer11
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Re: [Why did my fund suddenly drop in value?]

Post by theplayer11 »

why would vti be down .28% with both s&p 500 and nasdaq both up? I don't think I've seen this before.
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Re: [Why did my fund suddenly drop in value?]

Post by donfairplay »

edited - the post I quoted was from a different long ago day.
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

Well, it's that time again - here's the latest information from Vanguard: https://investornews.vanguard/upcoming- ... formation/
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by livesoft »

oldzey wrote: Wed Sep 11, 2019 3:35 am Well, it's that time again - here's the latest information from Vanguard: https://investornews.vanguard/upcoming- ... formation/
That Vanguard page will probably create some confusion by the labelling of the 3rd column "Reinvest/Ex Date" because for ETFs the reinvest date is not the ex dividend date. Furthermore, neither the payable date nor the reinvest date for the ETFs are listed.
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oldzey
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

Yes, it's that time again (when funds suddenly drop in value): viewtopic.php?f=10&t=297186
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by latesaver »

i get that the fund drops when the dividend is paid. but...why would a small cap fund like SWSSX fall 5% overnight. It doesn't pay anywhere near a 5% dividend yield?
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Re: [Why did my fund suddenly drop in value?]

Post by Geologist »

latesaver wrote: Fri Dec 20, 2019 7:53 pm i get that the fund drops when the dividend is paid. but...why would a small cap fund like SWSSX fall 5% overnight. It doesn't pay anywhere near a 5% dividend yield?
Have you considered a capital gains distribution?

I don't know what the ticker means, but you should go to the management company's website and look it up.
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Re: [Why did my fund suddenly drop in value?]

Post by rchmx1 »

latesaver wrote: Fri Dec 20, 2019 7:53 pm i get that the fund drops when the dividend is paid. but...why would a small cap fund like SWSSX fall 5% overnight. It doesn't pay anywhere near a 5% dividend yield?
Ya, I'm curious about this as well. I'm only recently in the market (as in for about a month), and pretty much all my investments are in Schwab mutual funds. All the distributions were larger this year than last, though much more so for SWSSX:

Dec 2018 Dec 2019*
SWTSX 1.1241 1.41
SWPPX 1.0221 1.42
SWMCX .5058 1.8
SWISX .553 2.92
SWSSX 2.5718 5.48


It's really just an academic curiosity for me, as to what can cause these kinds of variations year to year.

*(these are estimates, I guess? These are the negative numbers in my account today. Each fund should have been up, compared to it's similar ETF counterpart, so I don't know how I should guestimate the drop from the dividend payout against the rise in price at the end of the trading day).

No concerns here, just curious since it's the first time I'll have gone through this. Before a week ago, these funds were in my new taxable account. Last week I completed the process of selling them there and repurchasing them in my newer Individual 401k account, so I guess it's a small bonus that I won't have to pay taxes on these distributions in this tax year? My understanding is that that is the only reason I should "care" about this "yearly" event.
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Re: [Why did my fund suddenly drop in value?]

Post by Geologist »

rchmx1 wrote: Fri Dec 20, 2019 8:45 pm
latesaver wrote: Fri Dec 20, 2019 7:53 pm i get that the fund drops when the dividend is paid. but...why would a small cap fund like SWSSX fall 5% overnight. It doesn't pay anywhere near a 5% dividend yield?
Ya, I'm curious about this as well. I'm only recently in the market (as in for about a month), and pretty much all my investments are in Schwab mutual funds. All the distributions were larger this year than last, though much more so for SWSSX:

Dec 2018 Dec 2019*
SWTSX 1.1241 1.41
SWPPX 1.0221 1.42
SWMCX .5058 1.8
SWISX .553 2.92
SWSSX 2.5718 5.48


It's really just an academic curiosity for me, as to what can cause these kinds of variations year to year.

*(these are estimates, I guess? These are the negative numbers in my account today. Each fund should have been up, compared to it's similar ETF counterpart, so I don't know how I should guestimate the drop from the dividend payout against the rise in price at the end of the trading day).

No concerns here, just curious since it's the first time I'll have gone through this. Before a week ago, these funds were in my new taxable account. Last week I completed the process of selling them there and repurchasing them in my newer Individual 401k account, so I guess it's a small bonus that I won't have to pay taxes on these distributions in this tax year? My understanding is that that is the only reason I should "care" about this "yearly" event.
There's no question that it is a capital gains distribution. The Schwab estimate page gives 42 cents/share for dividends, 7 cents for short-term capital gains, and $1.29 for long-term capital gains. What the actual distribution is precisely, I don't know, but if you just look at Schwab's own information, you would know what the categories are.
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Re: [Why did my fund suddenly drop in value?]

Post by rchmx1 »

The only thing I don't understand is why the Cost Basis entries changed in my Schwab account. I thought the Cost Basis column showed the original purchase price of the asset in question, so I don't understand why the numbers in that column increased after the ex-div date.
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Re: [Why did my fund suddenly drop in value?]

Post by Geologist »

The Cost Basis shows the sum of all the purchase prices. If you reinvested the distributions, you just made an additional purchase. This increased your cost basis (and therefore reduces your unrealized capital gain) so you don’t have to pay taxes eventually twice.

If you have specific share ID for your cost basis method, you should be able to see this. I don’t have a Schwab account so I can’t advise you how to look for this.
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Re: [Why did my fund suddenly drop in value?]

Post by rchmx1 »

Geologist wrote: Thu Dec 26, 2019 1:57 pm The Cost Basis shows the sum of all the purchase prices. If you reinvested the distributions, you just made an additional purchase. This increased your cost basis (and therefore reduces your unrealized capital gain) so you don’t have to pay taxes eventually twice.

If you have specific share ID for your cost basis method, you should be able to see this. I don’t have a Schwab account so I can’t advise you how to look for this.
Ah of course! It's funny how, when you're just getting started with something, the most obvious things can slip your grasp. Thanks for taking the time to help clear that up!
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Re: [Why did my fund suddenly drop in value?]

Post by woof755 »

Is Vanguard late to post dividends for anyone else? My funds’ ex-div date is 12/23 and I still don’t see anything.
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Re: [Why did my fund suddenly drop in value?]

Post by MidwestMike »

woof755 wrote: Fri Dec 27, 2019 1:16 pm Is Vanguard late to post dividends for anyone else? My funds’ ex-div date is 12/23 and I still don’t see anything.
The ex-div date of VOO is 12/23. It’s payable date is 12/27. Sometimes it shows on the payable date and sometimes the day after. With Saturday being the day after it may not show until Monday.
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Re: [Why did my fund suddenly drop in value?]

Post by livesoft »

woof755 wrote: Fri Dec 27, 2019 1:16 pm Is Vanguard late to post dividends for anyone else? My funds’ ex-div date is 12/23 and I still don’t see anything.
Ex-dividend date is NOT THE PAYABLE DATE. Check the Vanguard web site. See also:
viewtopic.php?p=4909804#p4909804

If you have ETF dividends automatically reinvested then Vanguard keeps your dividend for that purpose and reinvests at the market open on the next market open date after the payable date. You should have seen this happen the last time you got a Vanguard ETF dividend that was automatically reinvested.

It woulld be nice if Vanguard showed pending transactions, but it doesn't.
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Re: [Why did my fund suddenly drop in value?]

Post by woof755 »

Thanks for the clarification!
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing
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Re: [Why did my fund suddenly drop in value?]

Post by ineedahomegym »

Maybe this is something for a different topic, but I've always been very skeptical of the way valuations are done or interpreted as what makes a good investment or not. Specifically around value - I believe in 'it', but 'it' I don't think is always represented or easily digested down to a nice etf. In today's world value and growth to a lesser degree - tend to concentrate into a few sectors.

Each sector has its own pros and cons and circumstances that make it a good or bad investment. With the way Value is right now, its heavily concentrated into energy and financials. I just have a very hard time imagining a world in which either of these sectors do well in the future ... apart from how massively they dipped earlier. So maybe yea, their good now. What I'm trying to say is value makes sense, but there needs to be a distinction or awareness of what that value really is. Especially when energy and finance are heavily reliant by external factors that have pushed them down (green energy, fuel effeciency, lack of travel, increased drilling, low interest rates)
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

Well, it's June again - here's the latest information from Vanguard: https://investornews.vanguard/upcoming- ... formation/
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
peppers
Posts: 1650
Joined: Tue Oct 25, 2011 7:05 pm

Re: [Why did my fund suddenly drop in value?]

Post by peppers »

Had this email show up today for Vanguard's year end distributions.
Link: https://advisors.vanguard.com/insights/ ... tributions
"..the cavalry ain't comin' kid, you're on your own..."
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oldzey
Posts: 1743
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: [Why did my fund suddenly drop in value?]

Post by oldzey »

"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
mav12
Posts: 207
Joined: Tue Nov 07, 2017 4:36 pm

Re: [Why did my fund suddenly drop in value?]

Post by mav12 »

Can't you also "harvest" the NAV price loss on your taxes if you're in a 0% cap gains bracket by selling on the ex-date (capital gains, dividends)?
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